Domestic fuel prices continue to move up as the global crude oil rally and the Centre's urge to shore up revenues leave refiners with little choice.
The benchmark stock indices have managed to hold on to opening gains despite some initial selling pressure.
Join us as we follow the top business news through the day.
Tech stocks dominate the S&P 500
US work visa suspension may hurt Indian IT Inc margins, further drive local hiring, say analysts
A summary of the likely business impact of Trump's H1B visa decision
PTI reports: "The US move to suspend work visas like H-1B till year-end may hurt the Indian IT industry’s margins as they will have to resort to more expensive local hiring to replace Indians, according to analysts.
A section of analysts thinks that Indian IT companies which have been ramping up local hiring can aid them in mitigating the impact of this development.
US President Donald Trump signed a proclamation to suspend issuing of H-1B visas - popular among Indian IT professionals - along with other foreign work visas for the rest of the year, aimed at helping millions of Americans who have lost their jobs due to the current economic crisis.
The order that comes into effect on June 24, is expected to impact several American and Indian companies who were issued H-1B visas by the US government for the fiscal year 2021 beginning October 1.
“This proclamation will have negative implications for the Indian IT sector, particularly on margins...(we) believe companies with lower levels of locally hired workers will see a greater negative impact,” a Goldman Sachs Equity Research report said.
The report noted that Indian IT outsourcing companies have been consistently working towards reducing their reliance on H-1B/L1 visas since 2017, and focusing on the locally hired workforce to create more jobs in the US economy.
Centrum Broking IT analyst, Madhu Babu, however, said there would be no impact of the development on Indian IT companies’ financial performance.
“The dependence of Indian IT companies on work visas has been coming down. With COVID-19, there are travel restrictions and it is not clear how many people would have travelled given the current circumstances. Also, people on H-1B visas in the IUS can seek extensions. So, we don’t see an impact,” Babu said.
On BSE, IT stocks of companies like TCS and Infosys were trading higher than the previous close."
Sensex rallies 519 points on easing Indo-China border tensions
It was a good day for the benchmark indices which managed to maintain upward momentum through the day.
PTI reports: "Rising for the fourth straight session, the BSE Sensex rallied over 519 points on Tuesday following reports that Indian and Chinese armies reached a consensus to de-escalate tensions on the border.
The 30-share BSE index settled 519.11 points, or 1.49 per cent, higher at 35,430.43, and the NSE Nifty surged 159.80 points, or 1.55 per cent, to close at 10,471.
L&T was the top gainer in the Sensex pack, soaring around 7 per cent, followed by Bajaj Finance, IndusInd Bank, NTPC, PowerGrid, M&M and Axis Bank.
On the other hand, Reliance Industries Bharti Airtel and Maruti were the laggards.
Positive cues from global markets and sustained foreign fund inflow kept investor sentiment higher.
In a positive move, Indian and Chinese armies have arrived at a consensus to “disengage” from all friction points in eastern Ladakh at a marathon meeting of top military commanders of the two sides on Monday, official sources said.
The talks were held in a “cordial, positive and constructive atmosphere” and it was decided that modalities for disengagement from all areas in eastern Ladakh will be taken forward by both the sides, they said.
On a net basis, foreign institutional investors bought equities worth Rs 424.21 crore in the capital market on Monday, provisional exchange data showed."
2 crore construction workers get nearly Rs 5K crore cash aid in lockdown
A report on cash aid by the labor ministry to help construction workers during the lockdown.
PTI reports: "Two crore building and other construction workers (BOCW) received cash assistance of Rs 4,957 crores during the COVID-19 induced lockdown, the Ministry of Labour & Employment said on Tuesday.
“In a significant move, the states governments, in response to the advisory dated 24th March, 2020, issued by the Ministry of Labour & Employment, have disbursed a substantial amount of Rs 4,957 crore cash assistance till date to approximately two crore registered construction workers across the country during the lockdown,” a labour ministry statement said.
About 1.75 crore transactions were done directly into the bank accounts of the workers through Direct Benefit Transfer (DBT).
Apart from cash benefits ranging from Rs 1,000 to Rs 6,000 per worker during the lockdown, some of the states have also provided food and ration to workers.
The Ministry of Labour & Employment is the nodal central ministry to coordinate with all the state governments and state welfare boards in the matter of welfare of the construction workers."
Nasscom says move to bar entry of certain non-immigrants ‘misguided and harmful’ to U.S. economy
The National Association of Software and Service Companies (Nasscom) on Tuesday said the move by the U.S. to bar the entry of certain non-immigrants into America was “misguided and harmful to the U.S. economy”. Technology giants Google, Microsoft and Twitter also echoed similar views, opposing the proclamation.
Pointing out that virtually every segment of the American economy, including manufacturing, technology, accounting and medicine, employs skilled workers from other countries for innovation, productivity, and skill, the industry body said that the U.S. administration should shorten the duration of the restrictions to 90 days.
“We urge the Administration to shorten the duration of these restrictions to 90 days. Lengthening these burdensome restrictions on U.S. companies that are trying to recover from the economic fallout of the COVID-19 pandemic will only serve to harm our economy,” Nasscom said in a statement.
Sebi relaxes rules for listed companies with stressed assets
Some regulatory relief for companies in trouble amid the current economic crisis.
PTI reports: "To ease fundraising for companies with stressed assets, market regulator Sebi on Tuesday decided to relax pricing framework under the preferential route and exempted allottees of preferential issues from open offer obligations in such cases with immediate effect.
Typically, listed companies having “stressed assets” experience progressive fall in their share price. Further, the disclosures that are made by stressed companies such as their financial results and default in servicing debts also aggravate the fall.
Such firms face certain difficulties in raising capital through the conventional means.
Consequently, Securities and Exchange Board of India (Sebi) has eased the pricing methodology of preferential issues by such firm.
The Office of Finance Minister Nirmala Sitharaman also tweeted: In order to help stressed firms raise capital while also protecting shareholders’ interests, Sebi has relaxed the pricing methodology for preferential issues by listed companies having stressed assets and has exempted allottees of preferential issues from open offer obligations .
The new framework is aimed at helping stressed companies raise capital through timely financial intervention at the same time protecting the interest of shareholders.
“Eligible listed companies having stressed assets will be able to determine pricing of their preferential allotments at not less than the average of the weekly high and low of the volume weighted average prices of the related equity shares during the two weeks preceding the relevant date,” Sebi said in a statement.
At present, the determination of the pricing covers a period of 26 weeks or more for frequently traded shares."
Suspension of foreign work visas to free up to 5.25 lakh jobs in US: White House
An estimate of the impact of the new H1B visa suspension on the US labor market.
PTI reports: "The temporary suspension of foreign work visas including H-1B and L1, that benefit Indian IT professionals, is expected to free up to 5,25,000 jobs in the US, senior administration officials said after President Donald Trump issued a proclamation in this regard.
The sum total of what these actions will do in terms of freeing up jobs over the course of the rest of 2020 is about 5,25,000 jobs,” a senior administration official told reporters during a conference call.
“Quite a significant number, where President Trump is focusing on getting Americans back to work as quickly as possible after we’ve suffered this hit to our economy based on the coronavirus and the harm it’s done, the official said.
A proclamation of Trump on Monday temporarily suspended till the end of the current year a number of popular non-immigrant visas including the H-1B, H-4, H-2B visa, J and L visas.
The H-1B is the high-tech visa. H-4 is the spouses of certain other visa holders, including H-1B and H-2B. H-2B is a bit of a low-skill catchall. The only ones that’ll come in under the H-2B will be those in the food service industry, which is less than 15 per cent of all H-2Bs.”
The White House asserted that American people stand by Trump as he takes commonsense action to preserve jobs for American citizens. Polls show that the overwhelming majority of Americans support pausing immigration as we recover as a nation from the coronavirus pandemic, it said.
A Washington Post-University of Maryland poll found that 65 per cent of those polled support pausing immigration into the country, including 61 per cent of minority respondents. A Pew Research Center poll found that 81 percent of Americans see mass immigration as a threat as we confront the challenges posed by the coronavirus, it added.
Democrats and liberal commentators used to support such commonsense efforts to protect American jobs, the White House said."
L&T commits to achieve self-reliance for the Indian industry
Engineering and construction major Larsen & Toubro (L&T) said it was committed to making the domestic industry selfreliant by creating a strong and feasible ‘Make in India’ ecosystem.
S.N. Subrahmanyan, CEO and MD, L&T, said: “With an unfortunate incident involving our brave soldiers at our border, sentiments are running high in the country. As a company involved in nation-building for more than eight decades, we firmly stand with the policy of manufacturing best-in-class products locally through ‘Make in India’.”
The company has been involved in developing a strong supply chain of local vendor partners in its businesses — 80% localization in the supply of 155 mm/52 calibre tracked, self-propelled ‘K9 Vajra-T’ guns to the Indian army, for example. It is also nurturing the local manufacturing and construction ecosystem involved in producing efficient and cost-effective substitutes for the global markets.
Inequality gap in India to narrow down post COVID-19: SBI report
Interesting predictions from SBI's research wing regarding the impact of Covid-19 lockdowns on the distribution of wealth.
PTI reports: "Post COVID-19 pandemic, the inequality gap in the country will narrow down, as income of rich states is likely to decline more than the poor states, according to an SBI research report- Ecowrap.
At all India level, per capita income (PCI), which is a measure of the earnings per person in a nation or geographic region, will decline by 5.4 per cent in FY21 to Rs 1.43 lakh, the report said.
We expect that the inequality gap in India will narrow down post-COVID pandemic as decline in income of rich states will be much greater than the decline in income of poor states, the SBI’s research report said.
A similar type of experience of decline in inequality was witnessed in Germany after the collapse of the Berlin war (1989), it said.
The report said this decline in PCI is higher than the nominal GDP decline of 3.8 per cent.
Globally also, the fall in per capita GDP of 6.2 per cent in 2020 is significantly greater than the 5.2 per cent decline in the world GDP.
The rich states (whose per capita income is greater than all India average) will be most affected in per capita income terms.
In Delhi (-15.4 per cent) and Chandigarh (-13.9 per cent), the decline in PCI is almost thrice than the decline at all India levels (-5.4 per cent), it said.
A total of eight states and Union Territories are supposed to witness a decline in PCI in double digits in FY21 and that is most alarming, the report said. These states constitute as much as 47 per cent of the country’s GDP.
This is due to the fact that these are the urban areas (and red zones also) where lockdown was implemented most severely. The closure of markets, shopping complexes and malls adversely affected income of these areas, it said.
Even after opening of markets (in staggered manner), the number of customers is still 70-80 per cent less than the normal times, the report said.
In the current fiscal, states like Maharashtra, Gujarat, Telangana, and Tamil Nadu are expected to witness a decline of 10-12 per cent in PCI.
However, in the relatively less well off states like Madhya Pradesh, Uttar Pradesh, Bihar, Odisha (where per capita income is below the national average) the decline in PCI is less than 8 per cent, the report said."
US proclamation to suspend work visas misguided: Nasscom
Business view on the latest US visa restrictions.
PTI reports: "Industry body Nasscom on Tuesday termed the work visa suspension proclamation as “misguided” and said this could be harmful to the US economy, possibly forcing more work to be performed offshore since the local talent is not available in the country.
The comments came after US President Donald Trump issued a proclamation to suspend issuing of H-1B visas - popular among Indian IT professionals - along with other foreign work visas for the rest of the year, aimed at helping millions of Americans who have lost their jobs due to the current economic crisis.
The proclamation that comes into effect on June 24 is expected to impact a large number of Indian IT professionals and several American and Indian companies who were issued H-1B visas by the US government for the fiscal year 2021 beginning October 1.
“The proclamation issued today barring the entry of certain non-immigrants into America and setting new conditions for others is misguided and harmful to the US economy...This new proclamation will impose new challenge and possibly force more work to be performed offshore since the local talent is not available,” Nasscom said in a statement.
It highlighted that the association’s members provide essential services to hospitals, pharmaceutical and biotech companies, state and local government agencies, financial institutions, technology and communications firms, grocers, manufacturers, and thousands of other businesses across the US.
“Highly skilled non-immigrants are playing critical roles in the delivery of these services and the development of these services and products.
Without their continued contributions to the US economy, the economic pain would worsen, industry would slow, and the timeline for a treatment and cure of COVID-19 would lengthen,” Nasscom said.
It added that those on H-1B and L-1 visas pay taxes and contribute to their communities and to local economies in many ways as well."
‘Border tensions may deflect India from reforms’
Fitch Ratings on Monday said the ongoing border tensions with China does not immediately impact India’s credit profile, but may distract the government from implementing reforms.
Fitch Ratings director (Sovereign Ratings) Thomas Rookmaaker said the government has announced reforms to improve growth going forward and a strong GDP growth is important to cut down public debt.
“The announcement of reforms could lift growth in the medium term and that’s where geo-politics comes in.
A tale of two lockdowns
RBI bars Yes Bank from paying interest on tier-2 bonds
The controversial Tier-2 bonds are back in the news once again for the wrong reasons.
PTI reports: "The Reserve Bank has asked private sector lender Yes Bank not to pay interest on tier-II bonds due on June 29 as its capital levels are below the mandatory threshold.
Interest payments on the bank’s 10.25 per cent unsecured non-convertible upper tier-II bonds issued in 2012 is due on June 29 and the city-based lender had sought the RBI nod to honour the same.
“The Reserve Bank of India has expressed its inability to accede to the bank’s request for payment of interest due as on June 29, 2020, since the bank does not meet the minimum capital requirements currently. Therefore, the bank would be unable to pay interest/coupon on the said upper tier II bonds which is due for payment on June 29, 2020,” the bank informed the exchanges on Friday.
As per the June 25, 2012 memorandum at the time of issue of the bonds, the interest due will be accumulated and paid later once the bank complies with stipulated regulatory requirements.
”....the specific features of the instrument require debt servicing to be linked to the bank meeting regulatory norms on capital adequacy, its managing director and chief executive Prashant Kumar said.
Asserting that the bank has adequate liquidity to meet all its obligations, Kumar said the coupon on these bonds is cumulative in nature and any unpaid sum will become payable once the bank meets minimum regulatory capital ratio.
The bank’s total capital adequacy ratio had stood at 8.5 per cent, including the tier-I ratio at 6.5 per cent as of March 31 this year. The regulatory requirement is to maintain the tier-I ratio above 8.875 per cent.
The bank, which had to be bailed out by a SBI-led consortium of lenders in March, is reportedly looking at a Rs 10,000-crore capital raise from new investors at present and already has enabling resolutions to raise up to Rs 15,000 crore."
Sensex jumps over 200 points in early trade; Nifty tops 10,300
The benchmark indices have opened with further gains this morning after a significant rally yesterday.
PTI reports: "Equity benchmark Sensex jumped over 200 points in early trade on Tuesday following positive cues from global markets and sustained foreign fund inflows.
After touching a high of 35,116.22 in early trade, the 30-share index was trading 145.74 points, or 0.42 per cent, up at 35,057.06.
Similarly, NSE Nifty rose 46.15 points, or 0.45 per cent, to 10,357.35.
IndusInd Bank was the top gainer in the pack, rallying around 5 per cent, followed by Bajaj Finance, PowerGrid, NTPC, Nestle India, Titan and Bajaj Auto.
On the other hand, TCS, Asian Paints, M&M and Infosys were among the laggards.
In the previous session, the BSE barometer settled 179.59 points, or 0.52 per cent, higher at 34,911.32, while the broader Nifty rose 66.80 points, or 0.65 per cent, to close at 10,311.20.
On a net basis, foreign institutional investors bought equities worth Rs 424.21 crore in the capital market on Monday, provisional exchange data showed.
According to analysts, positive sentiment in global stocks and unabated foreign fund inflows supported the domestic equity market.
On the global front, bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading with gains in early deals.
Stock exchanges on Wall Street ended on a positive note in overnight session.
International oil benchmark Brent crude futures fell 0.30 per cent to USD 42.95 per barrel."
India can reduce trade deficit with China by $8.4 bn: study
India can potentially reduce its trade deficit with China by $8.4 billion over FY21-22, which is equivalent to 17.3% of the deficit with China and 0.3% of India’s GDP, Acuité Ratings & Research said in a study.
This can be achieved by the rationalisation of just a quarter of India’s imports from that country in select sectors where India has well-established manufacturing capabilities, Acuité said.
Without any significant additional investments, the domestic manufacturing sector can substitute 25% of the total imports from specified sectors in the first phase, it added.
Suman Chowdhury, chief analytical officer, Acuité Ratings & Research, said, “With an import of $65.1 billion and export of $16.6 billion, India recorded a trade deficit of $48.5 billion with China in FY20. While imports from China have moderately declined by 15% since FY18 due to imposition of anti-dumping duties on some products, the dependence of the domestic economy on Chinese imports remains high with direct contribution to over 30% of India’s aggregate trade deficit.”
Petrol rate hiked 20 paise, diesel 55 paise, in 17th consecutive price hike
The rise in the price of domestic fuels continues as global oil prices enter a bull run and the government tries to shore up revenues.
PTI reports: "Petrol price on Tuesday was hiked by 20 paise per litre and diesel by 55 paise as the oil companies increased prices for the 17th day in a row that took the cumulative increase to a steep Rs 8.5 and Rs 10.01 per litre, respectively.
Petrol price in Delhi was hiked to Rs 79.76 per litre from Rs 79.56, while diesel rates were increased to Rs 79.40 a litre from Rs 78.55, according to a price notification of state oil marketing companies.
Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or value added tax.
The 17th daily increase in rates, since oil companies on June 7 restarted revising prices in line with costs after ending an 82-day hiatus in rate revision, has taken diesel prices to fresh highs. Petrol price too is at a two-year high."